The Daily Mail has agreed to pay "substantial" damages to psychic Sally Morgan after an article suggested she had "perpetrated a scam" on a theatre audience, a High Court judge has been told.
Associated Newspapers had apologised to Sally Morgan - who sued for libel after the article was published in the Daily Mail in September 2011 - and also agreed to pay her legal costs, Mr Justice Tugendhat heard.
At a High Court hearing in London, the judge was told Mrs Morgan was a psychic who had become well-known through appearances on television and in the theatre.
Graham Atkins, for Mrs Morgan, told the court his client was a psychic who had become well-known in the last five years or so.
"It was following a theatre performance in September 2011 in Dublin that an article appeared in the Daily Mail which, in the context of a general attack on psychics as being charlatans, accused Mrs Morgan specifically of having used a hidden earpiece during her performance in order to receive instructions from her team which she then repeated on stage as if she had received them from the spirit world."
He added: "The article thereby suggested that Mrs Morgan had deliberately and dishonestly perpetrated a scam on her audience in Dublin."
Mr Atkins said the suggestion that Mrs Morgan had cheated her Dublin audience by using an earpiece had arisen during a phone-in on Irish radio.
He said two women at the performance mentioned on air that they had been sitting at the back of the auditorium and thought they heard two crew members "saying something which Mrs Morgan had then repeated on stage".
"Following this, Mrs Morgan publicly stated that the suggestion she had cheated by using an earpiece was nonsense, as did the theatre itself which put out a very clear press statement denying any scam," said Mr Atkins.
"The crew members who were said to be part of the scam were sub-contracted by the theatre and were not members of Mrs Morgan's team."
He added: "Despite these denials, the suggestion was repeated by the Daily Mail in an article by the magician Paul Zenon, which was published in both the online and hard copy issues of the newspaper on 22 September 2011.
"The allegation contained in the article that Mrs Morgan cheated the audience in Dublin is completely false and defamatory of her.
"It has also caused enormous distress to Mrs Morgan, who decided, given the newspaper's initial defence of the article, that she had no choice but to commence legal proceedings against the publisher of the Daily Mail.
"I am pleased to say that the Daily Mail has now accepted that the allegation is untrue."
He said the newspaper apologised and had agreed to pay Mrs Morgan "substantial" damages plus her legal costs.
Brid Jordan, for Associated Newspapers, told the judge: "The Daily Mail withdraws the suggestion that Mrs Morgan used a secret earpiece at her Dublin show in September 2011 to receive messages from off-stage, thereby cheating her audience, which it accepts is untrue."
She added: "It apologises unreservedly to Mrs Morgan for publishing the allegation. It has agreed to pay her substantial damages, together with her legal costs, and it has also agreed not to repeat the allegation."